Mark Weitzel Discusses Trends in Energy Project Finance


Mark Weitzel, Co-Head of Orrick’s Energy and Infrastructure Group, recently discussed trends in energy project finance over the past year with Law360. According to Mr. Weitzel, "The real story in 2014 is that the yieldcos have shown their ability to be powerful competitors in the energy project acquisition market, paying very attractive prices based on their low cost of capital.”

Another trend observed by lawyers working in the sector was merchant power project developers utilizing short-term hedging strategies to raise capital, as utilities have been hesitant to commit to long-term power purchase agreements. “It's hard to find utilities that will sign long-term, traditional power purchase agreements, but the good news is that the financial hedging ​markets have stepped in and have allowed gas-fired projects to move forward, which will bring significant new generation to areas that sorely need new capacity,” Mr. Weitzel said, adding, “In a world where each gas-fired power plant provides huge capacity, the financial markets have stepped up on the hedging side to support construction of those projects."